Insurance for Design-Build and Architecture Firms

The critical additional coverage for design-build firms is professional liability insurance that covers design errors and omissions, including the acts of subconsultant architects and engineers working under the design-build contract. This coverage is excluded from GL policies and must be obtained separately or through a combined professional and general liability form. Limits should match the project values and contractual requirements, typically ranging from two million to ten million dollars or more for larger projects. ALKEME also ensures that GL completed operations, pollution liability, and other coverages coordinate properly with the professional liability program.

Professional liability for design-build contractors is written on a claims-made basis and covers the financial losses suffered by project owners due to negligent acts, errors, or omissions in the design services provided under the design-build contract. The policy should cover all design disciplines performed by or on behalf of the design-build firm. The retroactive date must reach back to cover all projects where the statute of repose has not expired. When changing carriers, ALKEME ensures continuity of coverage by verifying retroactive dates and securing extended reporting periods when necessary.

Yes. Several carriers offer combined professional and general liability policy forms specifically designed for design-build firms. These policies eliminate the coordination problems between separate professional and GL policies by covering both design and construction liability under a single form with a single carrier. This approach is particularly valuable for claims that involve both design and construction deficiencies because there is no dispute between carriers about coverage responsibility. ALKEME evaluates whether a combined form or coordinated separate policies provides the best coverage and value for each design-build client.

Design-build firms should be cautious about contract provisions that create uninsurable exposure, including guarantees that the design will be fit for a particular purpose, performance warranties that go beyond the professional standard of care, broad form indemnification without limitation of liability, consequential damages clauses without mutual waivers, and acceptance of responsibility for pre-existing site conditions without adequate investigation. ALKEME recommends that design-build clients review all contract language with both legal counsel and their insurance advisor before execution to ensure that the agreed terms are consistent with available insurance coverage.